More companies are now starting to enquire about and leasing warehouse space, including large e-commerce players like Amazon, according to Arvi Luoma, CEO and co-founder of logistics specialist Blackbrook Capital.
‘Across Europe, we have roughly half a billion euros of speculative logistics space under construction and we are focused on leasing those up as they complete’, Luoma told PropertyEU.
After 2023 when the market was slower and companies were taking time to make decisions, the decline in new construction has now created a situation where existing warehouse space is increasingly rare and needs to be snapped up.
One such example is Blackbrook’s logistic facility in Poznan, Poland, completed in 2023 and subsequently fully leased long-term to a single European contract logistics company after initially expressing indecisiveness.
According to Luoma, valuations have stabilized, with investors currently focused on protecting assets and keeping lenders satisfied. There is also a general belief that interest rates have peaked, and inflation is under control, although it is still present.
However, the speed of recovery is uncertain. ‘The second half of 2024 and into 2025 could see a return of market activity, potentially fueled by increased liquidity and lower borrowing costs. Deal closings are starting to be announced, particularly in the UK,’ he added.
The need for supply chain resilience due to global disruptions such as the war in Ukraine and the crisis in the Middle East is driving companies to secure warehouse space closer to home. He believes that the near-shoring trend is expected to benefit countries in South-Eastern and Central-Eastern Europe due to their land availability, labour costs, and space compared to Western Europe.
Luoma sees the greatest growth potential in development compared to acquiring existing properties or sale-leaseback deals.
‘Capital has become a lot more conservative. And for us, that creates, a window of opportunity to develop and bring to the market high quality, best-in-class logistics real estate.’
Blackbrook’s target markets are core logistics areas like Germany, France, and the Netherlands, along with more peripheral, but strong markets like Poland, Spain, and Italy.
Despite the past four years of unforeseen events, Luoma remains optimistic about the future, highlighting potential growth opportunities through partnerships.
‘My only reservation is that for the last four years, something negative has happened every year. I hope this will not be the case this year. But if it happens, we will all have to adapt again’, he admitted, adding that more peace and stability would create a more promising real estate environment.
